MILAN — German defense contractor Rheinmetall is set to expand its footprint in the Baltic region with the construction of an artillery shell factory in Lithuania.

The Lithuanian government and Rheinmetall have signed a memorandum of intent to build a 155mm ammunition plant in Lithuania, the country’s Ministry of Economy and Innovation said in a statement on April 16.

“This factory will be important for Lithuania, Ukraine and our entire region, in turn, the government will do everything so that it can start operating as soon as possible,” Lithuanian Prime Minister Ingrida Šimonytė said.

The official warned that Russia would remain the “biggest threat to Europe” for decades to come.

Lithuania’s minister of economy and innovation, Aušrinė Armonaitė, said at a press conference that construction of the plant would begin later this year.

According to the Lithuanian news network LRT, a state-owned piece of land in the northern part of the country has already been identified as a possible site.

The plan to host Rheinmetall is part of a larger series of amendments by Lithuanian economic authorities to the regulations that govern major defense projects. The reforms allow major weapons companies to move their production to Lithuania and speed up the operationalization of their factories.

Armonaitė said the idea is to “attract investors who will manufacture weapons here, reducing our dependence on ones purchased from international markets.”

Existing investment laws require foreign contractors or manufacturers to invest at least $30 million in Vilnius or $20 million elsewhere in the Baltic state.

A somewhat similar process was launched by neighbor Estonia, which is attempting to position itself as the region’s future ammunition hub.

Tallinn announced plans to create an industrial complex with infrastructure for national or foreign companies to produce small, medium and large caliber ammunition.

In a December 2023 interview with Defense News, the Estonian undersecretary for defense policy, Tuuli Duneton, said Estonia lacks domestic ammunition production, making the country entirely dependent on others.

“We are trying to change that,” she said.

Elisabeth Gosselin-Malo is a Europe correspondent for Defense News. She covers a wide range of topics related to military procurement and international security, and specializes in reporting on the aviation sector. She is based in Milan, Italy.

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